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Speculation affects rent because many buyers have debt. If an owner can raise rents that cover the interest and costs, they will; that is their baseline for how
by Tsagadai 11y ago
Speculation affects rent because many buyers have debt. If an owner can raise rents that cover the interest and costs, they will; that is their baseline for how low they will go. Large amounts of speculation will increase rents even with increases supply because owners need to service their debts (up until the point where renters won't pay and owners default).
- rahimnathwani 11y agoThat's not been my experience as landlord or as a tenant. Rents are negotiated within a narrow band (+/- 10%) based on the market rent for a comparable property at the time. The landlord's decision (forced or not) about whether to dispose of the property is independent of the rent-setting process. Residential rents in Beijing don't cover landlords' mortgage interest unless the debt-to-value ratio is low.